UPA’s 10-year averages are just statistical spin

Collapsing economic growth, high inflation and corruption explain why the Congress is heading for its worst defeat ever. GDP growth averaged 9% for much of UPA rule, but has halved to 4.5% in its final two years, crushing incomes and opportunities.

The Congress manifesto explains this away by using long-term averages. It says GDP growth in 10 years of UPA rule averaged 7.6% annually, against 5.9% under NDA rule. Independent observers (like economists Maitreesh Ghatak and Sanchari Roy) repeat this, and add that poverty declined by an average of 0.74% annually under the NDA, and by 2.18% under the UPA.

Hence, Congressmen and misguided analysts say Modi has hoodwinked voters into believing that UPA rule was terrible, and that he has a superior development model. Sorry, but voters can see the reality more clearly than analysts and Congress apologists.

Using averages is sometimes enlightening, but sometimes ridiculous, even suicidal. There’s an old saying that many people have drowned trying to cross a river just three feet deep on average. What matters is not the average depth but whether you can get through the deepest parts. Those relying on averages will sink, a fate awaiting Congress.

You reap what you sow. The UPA produced brilliant economic growth in 2004-09, and so got re-elected in 2009. It then performed miserably in 2009-14, and so will get hammered in 2014. That’s the simple story. Forget obfuscation by those using 10-year averages to declare the UPA period to be the best ever.

Voters don’t calculate averages for even five years, let alone ten. They focus on the latest trends and problems. Every newly-elected government has a honeymoon period with voters for two years, but then must deliver in the second half of its term. If it fails to do so, not all the averaging in the world will save it.

Ten years of UPA rule started off with two years of 8.5% growth but ended with two years of 4.5% growth. Had the trend been reversed — had the UPA started with 4.5% and ended with 8.5% — it would surely win the coming election. Trends matter, not averages.

This elementary arithmetic is being suppressed by many analysts. Some seem desperate to prove by hook or crook that Modi is hoodwinking the public about some superior Gujarat model.

Now, the Gujarat story has plenty of blemishes. As Ghatak and Roy say, “Bihar deserves the prize for the most dramatic turnaround in the 2000s. Gujarat gets credit for having steadily been on top of the league in terms of both the level of per capita income and growth rate, but has to share the honours with Maharashtra and Haryana in that category. However, the key point is that there is no evidence of any significant growth acceleration in Gujarat in the 2000s.”

RBI Governor Raghuram Rajan once headed a committee that ranked states using a variety of development indicators. Haryana, Uttarakhand and Maharashtra came out on top. Gujarat came only 12th, and was ranked “less developed.” This reflected the state’s poor social indicators, which have remained laggards despite some limited catch-up under Modi.

In the light of such development indicators, many politicians and analysts conclude that Modi has no new development model to transform India. He has certainly come up with good innovations like Jyotigram, which ensures 24/7 electricity for rural families. But these innovations do not add up to a new magic formula. If he becomes prime minister, he will face daunting challenges, and may disappoint over-enthusiastic followers.

But so what? To win, he doesn’t have to convince voters that he has some magic development model. He simply has to convince them that he will be more honest, more efficient, and more decisive than the Sonia-Manmohan crowd. And that’s dead easy.

Besides, most development data tell you very little about the quality of governance, which is Modi’s main electoral platform. Gujarat has not fared better in economic or social terms than neighbouring Maharashtra. But it has a much better reputation for good governance (notwithstanding some allegations of cronyism). Modi is seen by most voters (though not most Muslims) as a relatively honest and efficient politician who is responsive to people’s aspirations, while Maharashtra’s Congressmen are seen as callous, ineffective crooks.

Result: voters in Gujarat think they are better off because of the government, while those in Maharashtra they think they are better off despite the government. That’s why Modi can aspire to national leadership, while Prithviraj Chauhan (and Rahul Gandhi) look doomed to defeat. The quality of governance matters, not 10-year averages.

2 thoughts on “UPA’s 10-year averages are just statistical spin”

Sir, You are right, averages are just statistics. If GDP has actually grown ,as UPA claims, at 8% in the last ten years then there should be surplus produces in the market and prices should fall. But I see the reverse -food and manufactured goods more costly than ever. No person understands how GDP is calculated it is mired in statistical adjustments. NDA lost in 2004 because they mismanaged year 2000 kandhahar hijacking and they are also guilty of Godhra riots in 2002 and maybe booth caputring and vote manipulation also helped UPA and they are thugs

There should be something more than just a trend. During NDA’s rule(1998-2004), the inflation fell from 13% to 4% and GDP increased from 4.x to 6.x%, but still NDA lost in 2004. Could it be unemployment rate which I think reliable data is not available. Or some other socio-economic factor?